Energy Pricing and Costs, and Policy for America’s Future

Summary:
The Hamilton Project’s new study “A Strategy for America’s Energy Future: Illuminating Energy’s Full Costs” starts from the precept that energy consumption is critical to economic growth and our quality of life, but that we have some unintended and unaddressed negative consequences, and that the goal of our energy and climate policy must be to improve Americans’ well-being. Our energy choices do not currently address the social costs such as shorter lives, higher health care expenses, a changing climate, and weakened national security. While these costs are not captured in the retail price, we certainly are paying for them, and dearly.
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This month, the Hamilton Project released a new study called “A Strategy for America’s Energy Future: Illuminating Energy’s Full Costs”. This study starts from the precept that energy consumption is critical to economic growth and our quality of life, but that we have some unintended and unaddressed negative consequences, and that the goal of our energy and climate policy must be to improve Americans’ well-being. Our energy choices do not currently address the social costs such as shorter lives, higher health care expenses, a changing climate, and weakened national security. While these costs are not captured in the retail price, we certainly are paying for them, and dearly.

The report offers compelling data and ideas. For example, it is estimated that a kilowatt hour (kWh) of electricity costs about 3.2¢ to produce at an existing coal plant. However the true cost per kWh is 5.6¢ to our well-being, a true cost of over 170% more than the amount on our utility bill.

The Hamilton Project’s paper offers four principles for reforming America’s energy policies which are: pricing the full costs of energy, fostering of energy innovation, environmental regulations, addressing climate change globally.

The report concludes that current U.S. energy policies perpetuate energy choices based simply on the immediately visible costs that appear on utility bills and at the gas pump. So long as this continues, we will rely on energy sources that shorten our lives, increase our need for healthcare, contribute to climate change, and weaken our national security.

The solutions offered include pricing the full cost of carbon and other pollutants, making greater investment in research and development, implementing efficient regulation, and addressing climate change globally, in such a manner as to maximize the benefits of our energy-driven economy.

In addition to this strategy paper, there are three new policy proposals released by the Hamilton Project on improving energy consumption and environmental quality regulations, creating a new clean energy standard and improving the federal government’s efforts to deploy new energy technologies.

Redfish Technology is a strong proponent of initiatives to strengthen the green and alternative energy industries in the United States. We work with leading cleantech companies to recruit top talent and grow this sector. Here are some further links.

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References:

A Strategy for America’s Energy Future: Illuminating Energy’s Full Costs
http://www.brookings.edu/papers/2011/05_energy_greenstone_looney.aspx
By Michael Greenstone and Adam Looney

A National Clean Energy Standard http://www.brookings.edu/papers/2011/05_clean_energy_aldy.aspx
By Joseph E. Aldy

An Energy Technology Corporation Will Improve the Federal Government’s Efforts to Accelerate Energy Innovation
http://www.brookings.edu/papers/2011/05_energy_corporation_deutch.aspx
By John M. Deutch

Improving Cost-Benefit Analysis and Regulatory Review
http://www.brookings.edu/papers/2011/05_environment_regulation_gayer.aspx
By Ted Gayer

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